September 21, 2017
The recovery is picking up, with real GDP growth projected to reach 1.6 percent this year and 1.8 percent in 2018.
", "publishDate": "2017-09-21", "sections": [ { "heading": "Macroeconomic outlook and recent performance", "content": "- The recovery is picking up, with real GDP growth projected to reach 1.6 percent this year and 1.8 percent in 2018.\n- Growth drivers:\n - Buoyant corporate investment.\n - Rebound in residential construction.\n - Solid consumer demand.\n- Dragging factors:\n - Net exports have been a drag on growth.\n - France’s external position is assessed to be weaker than implied by economic fundamentals.\n- Labor market:\n - Private sector job creation has begun to accelerate moderately.\n - The unemployment rate has begun to recede moderately from its 10 percent post-crisis mark.\n- Inflation outlook remains subdued, in line with many other euro area economies.\n- Fiscal stance:\n - Fiscal consolidation, on a structural basis, has stalled since 2015.\n - The public debt ratio is still rising.\n- Medium-term constraints on potential growth:\n - Modest total factor productivity growth.\n - A stagnant working age population.\n - High structural unemployment (especially among the young and low-skilled).\n - Weak external competitiveness." }, { "heading": "Government reform strategy and policy priorities", "content": "- The new government’s strategy aims to:\n - Make France’s economy more dynamic.\n - Make public finances sustainable.\n- Fiscal policy focus:\n - Rein in public spending to gradually reduce the fiscal deficit while lowering the tax burden.\n- Labor market reforms:\n - Enhance firm-level flexibility in labor negotiations.\n - Revamp unemployment insurance.\n - Improve professional training and apprenticeship programs.\n- Tax reforms:\n - Designed to boost growth, employment, and competitiveness." }, { "heading": "Executive Board assessment and recommendations", "content": "- Directors welcomed the broad reform agenda and noted an important window of opportunity to:\n - Boost growth.\n - Reduce unemployment.\n - Ensure sustainability of public finances.\n - Improve competitiveness.\n - Promote inclusiveness and social mobility.\n- Key challenge: implementation, especially of the envisaged fiscal strategy and labor market reforms.\n- Fiscal recommendations:\n - Support for the government’s gradual expenditure-based fiscal consolidation plan aiming for a near-balanced budget over the medium term.\n - Success depends on timely specification and implementation of efficiency-oriented expenditure reforms given past fiscal slippages and envisaged tax relief for 2018/19.\n - Recommendation to conduct comprehensive spending reviews to identify savings at all levels of government while ensuring adequate social protections.\n- Labor market recommendations:\n - Welcome for proposed reform of France’s labor laws to enhance enterprise-level flexibility, improve social dialogue, and reduce judicial uncertainty related to dismissals.\n - Need for complementary measures to reduce high structural unemployment.\n - Support for reforms to unemployment insurance and professional education and apprenticeship systems.\n - Recommendation for continued wage moderation.\n- Tax and competitiveness recommendations:\n - Planned cut in the corporate income tax rate and a further reduction in the labor tax wedge seen as helpful for competitiveness.\n - To maximize growth benefits, complement with measures to improve the efficiency of capital taxation by:\n - Limiting exemptions.\n - Reducing the debt bias.\n - Eliminating disincentives to company growth.\n - Merit seen in unification of tax rates on interest, dividends, and capital gains, and recommendation to streamline the taxation of long-term savings.\n- Financial sector and supervision:\n - Financial sector more resilient since the crisis; large banks have buttressed balance sheets and provided adequate financing.\n - Banks and insurers need to continue adapting business models to the low interest environment, new technologies, and evolving regulatory standards.\n - Supervisors should remain vigilant regarding market risks—including a potential increase in interest rates—and the rise in corporate indebtedness." }, { "heading": "France: Selected Economic Indicators, 2015–18 (Projections)", "content": "- Real economy (change in percent)\n - Real GDP: 2015: 1.1; 2016: 1.2; 2017: 1.6; 2018: 1.8\n - Domestic demand: 2015: 1.9; 2016: 1.7\n - Private consumption: 2015: 1.4; 2016: 2.2\n - Public consumption: 2015: 1.3; 2016: 0.5\n - Gross fixed investment: 2015: 1.0; 2016: 2.9; 2017: 3.1\n- Foreign balance (contribution to GDP growth)\n - 2015: -0.5; 2016: -0.8; 2017: -0.3; 2018: 0.0\n - Exports of goods and services: 2015: 4.3; 2016: 3.0; 2017: 3.9\n - Imports of goods and services: 2015: 5.7; 2016: 4.2; 2017: 3.5\n- Nominal GDP (billions of euros)\n - 2015: 2194; 2016: 2229; 2017: 2283; 2018: 2351\n- CPI (year average)\n - 2015: 0.1; 2016: 0.3\n- GDP deflator\n - 2015: 0.4; 2016: 0.8\n- Gross national savings (percent of GDP)\n - 2015: 22.3; 2016: 22.0; 2017: 22.1\n- Gross domestic investment (percent of GDP)\n - 2015: 22.8; 2016: 23.0; 2017: 23.3\n- Public finance (percent of GDP)\n - General government balance: 2015: -3.6; 2016: -3.4; 2017: -3.0\n - Revenue: 2015: 53.1; 2016: 53.0; 2017: 52.5\n - Expenditure: 2015: 56.7; 2016: 56.4; 2017: 56.2; 2018: 55.6\n - Structural balance (percent of pot. GDP): 2015: -2.0; 2016: -1.9; 2017: -1.8; 2018: -2.2\n - Primary balance: 2015: -1.7; 2016: -1.4\n - General government gross debt: 2015: 95.6; 2016: 96.3; 2017: 96.8; 2018: 97.0\n- Labor market (percent change)\n - Employment: 2015: 0.2; 2016: 0.6; 2017: 0.7\n - Labor force: (not specified)\n - Unemployment rate (percent): 2015: 10.4; 2016: 10.0; 2017: 9.5; 2018: 9.0\n - Total compensation per employee: …\n- Credit and interest rates (percent)\n - Growth of credit to the private non-financial sector: 2015: 3.2; 2016: 4.1; 2017: 5.2; 2018: 5.8\n - Money market rate (Euro area): 2015: -0.2\n - Government bond yield, 10-year: (not specified)\n- Balance of payments (percent of GDP)\n - Exports of goods: 2015: 21.0; 2016: 20.7; 2017: 20.6\n - Imports of goods: 2015: -22.1; 2016: -21.9; 2017: -22.4; 2018: -21.7\n - Trade balance: 2015: -2.3\n - Current account: 2015: -0.4; 2016: -1.0; 2017: -1.1\n - FDI (net): 2015: -0.1\n - Official reserves (US$ billion): 2015: 55.2; 2016: 56.1\n- Exchange rates\n - Euro per U.S. dollar, period average: 2015: 0.90\n - NEER, ULC-styled (2000=100): 2015: 97.9; 2016: 98.7\n - REER, ULC-based (2000=100): 2015: 92.7; 2016: 92.0\n- Potential output and output gap\n - Output gap: 2015: -2.4; 2016: -1.3\n\nSource: IMF Executive Board Concludes the 2017 Article IV Consultation with France (September 21, 2017).\n\n---\n\n\n References\n\n- The Executive Board\n- France and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2017/09/21/pr17364-imf-executive-board-concludes-the-2017-article-iv-consultation-with-france" } ], "bullets": [ "[Markdown version](/en/news/articles/2017/09/21/pr17364-imf-executive-board-concludes-the-2017-article-iv-consultation-with-france/index.md)", "[Structured JSON version](/en/news/articles/2017/09/21/pr17364-imf-executive-board-concludes-the-2017-article-iv-consultation-with-france/index.json)", "[Bundle manifest](/en/news/articles/2017/09/21/pr17364-imf-executive-board-concludes-the-2017-article-iv-consultation-with-france/bundle-manifest.json)", "Published: September 21, 2017", "The recovery is picking up, with real GDP growth projected to reach 1.6 percent this year and 1.8 percent in 2018.", "Growth drivers:", "Dragging factors:", "Labor market:", "Inflation outlook remains subdued, in line with many other euro area economies.", "Fiscal stance:", "Medium-term constraints on potential growth:", "The new government’s strategy aims to:", "Fiscal policy focus:", "Labor market reforms:", "Tax reforms:", "Directors welcomed the broad reform agenda and noted an important window of opportunity to:", "Key challenge: implementation, especially of the envisaged fiscal strategy and labor market reforms.", "Fiscal recommendations:", "Labor market recommendations:", "Tax and competitiveness recommendations:", "Financial sector and supervision:", "Real economy (change in percent)", "Foreign balance (contribution to GDP growth)", "Nominal GDP (billions of euros)", "CPI (year average)", "GDP deflator", "Gross national savings (percent of GDP)", "Gross domestic investment (percent of GDP)", "Public finance (percent of GDP)", "Labor market (percent change)", "Credit and interest rates (percent)", "Balance of payments (percent of GDP)", "Exchange rates", "Potential output and output gap", "[The Executive Board](http://www.imf.org/external/np/sec/memdir/eds.aspx)", "[France and the IMF](http://www.imf.org/external/country/FRA/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2017/09/21/pr17364-imf-executive-board-concludes-the-2017-article-iv-consultation-with-france/index.md", "json": "/en/news/articles/2017/09/21/pr17364-imf-executive-board-concludes-the-2017-article-iv-consultation-with-france/index.json", "bundleManifest": "/en/news/articles/2017/09/21/pr17364-imf-executive-board-concludes-the-2017-article-iv-consultation-with-france/bundle-manifest.json" }, "generatedAtUtc": "2026-09-25T21:12:38.032Z" }